1. Automotive News Manufacturing Conference 14 June 2005 THE PERILS OF DEMAND FORECASTING Craig Cather President & CEO

2. Today’s Presentation Why Build-to-Order? Challenges of Build-to-Order Forecasting Demand Opportunities for the Future

3. WHY BUILD-TO-ORDER? Customer Satisfaction Inventory Reduction

4. CHALLENGES OF BUILD-TO-ORDER "By 2003 or 2004, up to 80 percent of our buyers could be specifying the vehicles they want to buy" Harold Kutner, General Motors July 31 st, 2000 Source: TheCarConnection.com

5. CHALLENGES TO BUILD-TO-ORDER Implications vary by Market Supply Chain is not structured for BTO U.S. Dealers want Inventory Specifications are less critical to customers than price and delivery Forecasting Demand is a Daunting Task

6. Capacity Planning Volumes (CPVs) Monthly Production Variance Inventories Option Complexity FORECASTING DEMAND Current Industry Performance

7. FORECASTING DEMAND Capacity Planning Variation – GM Annual average volume variance from CPV expectations over the life of the program

8. FORECASTING DEMAND Capacity Planning Variation – Ford EN53 CV/GM U204 Escape P131 F-Series P221 F-Series C170 Focus V229 Freestar J56 Mazda 6 M205 T-Bird Annual average volume variance from CPV expectations over the life of the program

9. FORECASTING DEMAND Capacity Planning Variation – DCX DR Ram KJ Liberty WJ G. Cher JR Sedans NPL Neon CS Pacifica Annual average volume variance from CPV expectations over the life of the program

10. FORECASTING DEMAND Capacity Planning Variation – New Domestics Annual average volume variance from CPV expectations over the life of the program

11. FORECASTING DEMAND Lowest Production Variance Lowest production variability among North American produced vehicles MDX had lowest cumulative production variation over past 3 years Honda and Toyota dominated due to flexible manufacturing Big 3 vehicles not far behind: Ram, F- Series Super Duty, Silverado Coefficient of Variation May 2002 – April 2005

12. FORECASTING DEMAND Greatest Forecast Variance Greater variation in production due to seasonality of vehicle, ramp- up/ramp-down scenarios or weak product Coefficient of Variation May 2002 – April 2005 Average MDX Launch Programs Existing Programs

13. FORECASTING DEMAND US Light Vehicle Inventory Source: Autodata

14. FORECASTING DEMAND VehicleOptionDelayMay Inventory (days) Ford Five Hundred Moonroof4 weeks 78 Safety Package4 weeks AWD4 weeks Ford Freestyle Moonroof4 weeks 118 Safety Package4 weeks AWD4 weeks Mercury Montego Moonroof4 weeks 133 Safety Package4 weeks AWD4 weeks Ford Expedition Rear Entertainment System4 weeks 98 Lincoln Navigator Rear Entertainment System4 weeks 116 Ford Explorer Black Running Boards4 weeks 96 Mercury Mountaineer Black Running Boards4 weeks 96 Cadillac STS AWD 5-speed auto4 weeks 88 Chevrolet Silverado Duramax Diesel Engine4 weeks 83 Two-tone Paint8 weeks Hummer H2 Side Airbags4 weeks 67 Pontiac G6 Onstar4 weeks 59 2.4L L4 Engine4 weeks Delivery Delays due to Option Availability

15. FORECASTING DEMAND Variation from “the plan” is creating great inefficiencies throughout the system Inflated inventories are forcing OEMs to provide incentives or sell to low-margin fleet markets in order to move product Forecasting content mix accurately is a significant problem Synopsis

16. OPPORTUNITIES FOR THE FUTURE Improve Product Cadence Stability Increase Parts Commonization & Re-use Standardize Processes Stabilize Procurement Increase Plant Flexibility Bring Logistic Providers into the planning process earlier Push Vehicle Contenting Downstream Stability, Commonization & Flexibility

17. Craig Cather President & CEO CSM Worldwide, Inc. +01 (248) 380-9000 craigcather@csmauto.com